Brands. Services. Investing.

Angel Investing 101Dara Trujillo Chief Merchant

SLC Group Holdings

Brands. Services. Investing.

Just a bit about me:

Brands. Services. Investing.

• 8YearsBrickandMortar- Mercantile• 1yearMallDevelopment- Simon• 15YearsThemePark- Disney• 5YearsTVShopping- HSN• 1YearAngelInvestments-SLC

Notallinvestorsare“Wonderful”

WhatisanAngelInvestor?An Angel Investor (also known as a business angel, angel funder, privateinvestor or seed investor) is an affluent individual who provides capital for abusiness (typically a start-up, new to market, smaller business) in exchange fora convertible debt or equity ownership. Typically when an investment is given,the business provides an evaluation and based on the company’s evaluation,an equity offer is made in exchange for cash.

Convertible Debt- Basically a “loan” to the start-up and instead of a return in theform of principal plus interest, the investor would receive equity in the company.For a convertible debt (or note) you do not have to pre-determine the evaluationof a company-because maybe it is too new-and you can “wait and see” what salesare like before making that determination.

VC (Venture Capitalist)- A private equity investor that provides capital tocompanies exhibiting high growth potential in exchange for an equity stake.Typically, the business is evaluated at or under $5M. A VC is less hands oncompared to that of an Angel Investor.

WhatdoesanAngelInvestorlookforinanEntrepreneur?

• Anamazing,dedicated,hardworkingindividual

• Anincredibleproduct• Fillsavoidinthemarketorfillsawhitespace• HasNEVERbeenseenbefore-really?• SolvesaproblemOR• Hasbeennewly“re-imagined”• Canbesoldatretail-customerswillbuyitifgiventhechance• COG,Margins,Sourcing/Manufacturing,Retail-alllineup• CanbedisruptiveORcompetitive

• Awellthoughtoutbusinessplan• Lowdebt• Few(ifno)investors• Exitstrategy

WhatdoIneedtopreparetotalkwithanAngelInvestor?

First,youmightask,howdoIEVENfindone???• Network• Lookclosetohome• UsetheInternet• AttendEvents• Askyourbank• Fundraisingadvisors• SCORE

Onceyoufindone,BEPREPARED!!• Makesureyouhaveyourbusinessplanwrittenout• Ensureyouhavea“workingprototype”oractualsampleofyourproduct

• CommunicateyourBENEFITS(NOTyourfeatures)• KNOWyournumbers:COG,Wholesale,Retail,“Landedcosts”,annualrevenue,

expenses,laborcosts,rent,utilities-createanaccurateP&L• KNOWwhoyourcompetitorsareandWHYareyoudifferent• KNOWyouraudience/demographic• KNOWwhatyouareaskingfor/whatyouwant/need• KNOWwhatyourclaimsareandthattheyCANBEsubstantiated• KNOWyour“exit”strategyideal

AngelInvesting:TrueorFalseTherearemanymythsaboutAngelinvesting.Herearejustafew:• AngelInvestorsandVCarebasicallythesame• AngelInvestorsallhaveapactandsticktogether• AngelInvestorswanttorunyourcompany• AngelInvestorsgivelessmoneythanVCs• AngelInvestorsaretypicallyyourfamilyandfriends• AngelInvestorsaretypicallyextremelywealthy• AngelInvestorshaveallthepower• UsingandAngelInvestorforequityismyonlyoptionwiththem:

• Factoring• LineofCredit• Royalty• Licensing• Servicebasedopportunities

TherearemanytruthsaboutAngelInvesting.Hereareafewgoodones:• Anyone can be an Angel Investor if they have money to give you in exchange for

some equity in your company• Angel Investors are typically people (known or not) that just want to “help”• Angel Investors have money and know they might be taking a risk-therefore they do

not expect repayment

AngelInvesting:ProsandConsEvery Entrepreneur should weigh the pros and cons on everything they do that involvesmoney-from manufacturing, packaging, getting a broker and even finding an investor.You’ve worked hard to be an Entrepreneur, put the ball in YOUR court.

• Alwaysgetmultipleestimatesonbusinessexpenses• Alwaystaketimetothinkthroughdecisions-nevermakethemonthespot(Remember,Shark

TankisSTILLjustgoodTV)• Alwaystalktoyourmentor(ifyoudon’thaveone,GETONE!)• Neverbeafraidtoaskquestions-itisYOURbusinessafter-all• Nevermakeadecisionoutofdesperation-rememberwherethereisawillthereisaway

• AIareagreatresourcetohaveandtypicallyhaveexcellentbusinessknowledge

• Ifyouneedcashtocontinue,getanAI• AIsareusuallywellconnectedandyoubenefit• AIsarewillingtotakearisk.

• Youwillneedtogiveupsomecompanyequity• Thebarmightgetsettoohightoachieve• Theremightbe“stringsattached”• Youaren’tin“full”control

CommonlyAskedQuestions• HowmuchequitydoesanAngelInvestortypicallytake?

• HowinvolvedisanAngelInvestorinthe“daytoday”operations?

• WhathappensifIwantoutoftheagreement?WhatdoIdo?

• AreAngelInvestors“secretive”-likewillIknowwhomineis?

• WillandAngelInvestorhelpmerunmycompany?

• DoIhavetotakealloftheiradvise?WhatifIdisagree?

• HowcanIshowhim/hermyproduct?

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AdditionalQuestions?